I-526 contract likely to move forward soon, but legal issues remain

An aerial view of the proposed path of the Mark Clark Expressway looking from West Ashley toward Johns and James islands. The South Carolina Department of Transportation Commission is to vote on a revised project contract for the completion of Interstate 526 from U.S. Highway 17 in West Ashley to James Island. Leroy Burnell/Staff/File

The completion of Interstate 526 across Johns and James islands is poised to take a huge step forward as government agencies and elected officials haggle over the details of a revised project contract.

The South Carolina Department of Transportation Commission soon will vote on whether to approve the new contract, said Chairman John Edwards. The move will mark the first concrete step forward since Charleston County approved the project by the narrowest of margins in December 2012.

The commission’s next meeting is Thursday, and the matter could come up for a vote then, Edwards said. The commission is leaning toward approving the new contract, he said, but county and DOT staffers still are working out legal issues, so the DOT’s vote could be delayed until the commission’s Jan. 16 meeting.

Updating the three-party contract, known as an Intergovernmental Agreement, is the next required step for the controversial project. In the project’s initial $420 million contract, Charleston County was the project’s sponsor, the DOT was responsible for building the road, and the S.C. Transportation Infrastructure Bank was responsible for paying for it.

But Charleston County now wants more control of building the road, and the price estimate has climbed to $558 million.

Several concerns are slowing the negotiation process, officials said, including the DOT’s need to be certain that the road is built correctly if the agency doesn’t manage the project; who would be responsible for cost overruns; and who would address claims for compensation from residents who live within 1,000 feet of the proposed project.

“We’ve got a couple of things to iron out,” Edwards said. Even if Charleston County is allowed to manage the project, the DOT must have some kind of supervisory role, he said, because when the project is complete, the DOT would have to bring it into the state road system. “When we get to the end, we want a road we can bring into the system with no problems.”

Paying cost overruns

DOT Commissioner Jim Rozier, who supports the completion of I-526, said, “I don’t have any trouble with Charleston County managing it, but if the DOT is going to maintain it, we need a say in how it’s built.”

Rozier also said he thinks the county must agree to be responsible for cost overruns. “The DOT is not going to be responsible for that,” he said.

Charleston County Council Chairman Teddie Pryor said he doesn’t think cost overruns are an issue, because the county isn’t going to run over budget. In fact, he thinks the county can build it for less than the DOT’s estimate of $558 million.

“When you have a budget, you can’t go over the budget,” he said. And, he added, the Infrastructure Bank never has failed to provide enough money to complete a project it had approved.

The money for the project already is approved, Pryor said. The Infrastructure Bank initially approved $420 million for the road. In 2012 it approved another $130 to $150 million from money it will have available after 2017, he said.

Debra Rountree, the Infrastructure Bank’s director of operations, said she’s not certain whether her group will have to approve the amended contract. It depends how much it has been changed from the original version.

The amount of money approved by the Infrastructure Bank will be in the amended contract, she said. And the amended contract also will address cost overruns, she said, but she’s not yet sure how overruns will be addressed.

She also said that the state’s Joint Bond Review Committee must approve the final $130 to $150 million that the bank approved last year, and the final contract likely will be contingent on that approval.

The Joint Bond Review Committee’s next meeting is Wednesday, but officials said they don’t expect the additional money for I-526 to be on the agenda.

Compensation claims

At the local level, County Councilman Dickie Schweers said he remains concerned about the impact on county taxpayers of an amendment to council’s December 2012 motion to move forward and build the road. The amendment involved property owners who live within 1,000 of the proposed road.

It stated that the county must make “good faith efforts to evaluate and consider claims made by residents for compensation due to the impact of the Mark Clark Expressway on their property.” Many officials and county residents interpreted the amendment to mean property owners within 1,000 feet could be compensated for the drop in the value of their property.

Schweers said the project is supposed to be financed by the Infrastructure Bank. County taxpayers aren’t supposed to have to cover any of the cost, but he’s worried that taxpayers could be on the hook to cover the cost of compensation.

Schweers said council Vice Chairman Elliott Summey told the DOT Commission at its September meeting that the county was responsible for all the “quality of life” amendments.” He thinks that could put county taxpayers on the hook to cover the cost of claims filed by property owners.

Schweers last month asked Pryor if he would schedule a public discussion on the compensation issue, but Pryor wouldn’t agree to do that.

Already 66 county residents who live within 1,000 feet of the proposed road have filed claims for compensation for the drop in the value of their property. The claims total $8.5 million.

The vote to build the road “pivoted on compensation,” Schweers said, and most people interpret that to mean financial compensation. If the county doesn’t make an effort to honor those claims, he said, “We’ll be going to court to fight our own citizens.”

Pryor has said repeatedly that the amendment never meant that people would be financially compensated. The county simply will consider claims for damages if they are filed.

Pryor said he sought input from the county’s legal staff when the amendment was crafted. The county never intended to issue checks for declines in property value, he said. And the amendment, as written, doesn’t require the county to do that.

County attorney Joe Dawson, in an email response to questions on compensation, said, “No opinion was given to Council regarding whether the proposed amendment would require Council to pay for potential decreases in property values because the amendment did not require payments to be made or money to be appropriated.”

He also stated, “The resolution did not state that it is the policy of Council to compensate claimants if a demand for payment is made; rather, it is a directive to county staff to look into such claims when they would otherwise have no obligation to do so.”

Dawson didn’t respond to questions on whether the county could be on the hook to pay property owners who filed claims. He simply referred to the above statement in response to those questions.

Edwards said the DOT will make sure in the new contract that it isn’t on the hook for compensating local residents. The DOT won’t agree to anything that brings financial liability to the agency, he said. “That’s something we want to stay way away from. If Charleston County wants to pay that, that’s up to Charleston County.”

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